EU MCA Bill Set to Shape Global Stablecoin Rules – Binance
Global stablecoin regulation takes a significant step forward with the upcoming European regulatory framework, according to Binance, the world's largest cryptocurrency exchange.
The EU markets the Crypto-Assets Regulation (MiCA) Bill, the first comprehensive regulatory framework for crypto, which will legitimize the industry for legislators worldwide.
According to a Binance spokesperson who told Cointelegraph, MCA will be a “crucial element” in developing a comprehensive global stablecoin regulation.
“By establishing clear rules on issuance, reserve management and redemption, the MCA will improve market stability and consumer protection, as well as foster innovation through legal certainty.”
MiCA's overall approach will serve as a “global benchmark” for other jurisdictions looking to align their frameworks with MiCA, a Binance representative added.
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The MiCA framework, which affects crypto-asset service providers, will be fully implemented on December 30. Some of the largest European financial institutions are preparing their digital asset offerings.
MCA's impact on statscoins depends on implementation.
While MCA states that fully decentralized digital assets are outside its scope, some decentralized finance (DeFi) protocols include centralized intermediaries, making the framework useful in those cases.
However, a Binance report shared with Cointelegraph suggests that stricter implementation of global stablecoin regulations could create more problems for stablecoin providers.
The report said.
“A stricter interpretation of the law could require these DeFi protocols to meet the same licensing and know-your-customer (KYC) requirements as traditional financial services firms. This can create burdens that many DeFi protocols find challenging or unwilling to meet.
Overview of Global Stablecoin Regulation. Source: Binance
In an effort to create more stability, the EU's MCA implementation will ban the issuance of stablecoins in May 2022, such as the Terra USD (UST) stablecoin, without a fallback avoidance algorithm.
MiCA crypto “just like TradFi?”
While the MiCA bill is seen as a net positive for the crypto industry, it also introduces consolidation concerns for smaller companies.
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According to Anastasija Plotnikova, CEO of Fedium, a regulatory and blockchain infrastructure company, this draft will make the Web3 industry similar to traditional finance (TradFi). .
Plotnikova told Cointelegraph:
“Crypto is becoming like TradFi. The more money you have, the more assets under management, the easier it is to scale.
This could put more pressure on smaller companies with limited funds, she added.
“It's going to be more predatory buying this off the shelf, VC practices or big crypto companies just buying the talent.”
Some large banks are already preparing their digital assets for MiCA implementation.
Société Générale, the world's 19th largest banking group by assets, has partnered with Bitpanda to launch a stablecoin honoring Mica, the euro-denominated EuroCoinVertible (EURCV).
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